Mr Pallas(Tarneit) —  I rise to speak on part 2  of  the Public Accounts and Estimates Committee (PAEC) report on the  2013-14 budget estimates. Specifically I will make some observations about the way the coalition  government  has  been dealing with debt.

Often  the  quality of public debate about debt does our democracy a disservice. State debt is  an  extraordinarily  complex issue, which makes it much easier to resort to sloganeering  than talking intelligently.  Let me be clear:  Victorian Labor does not have a problem with public debt per se, but we are also committed to  managing  the economy responsibly,  which means recognising that  there is a limit to how much the state should borrow  and being honest about what  the debt is for.

The previous government decreased state debt, and the coalition inherited a debt level of $8 billion, or 2.5 per cent of  gross state product (GSP). Since  then, this government  has run  up the  bill to  $15.6 billion.  It intends to  borrow another $10 billion over the  forward estimates period, increasing state debt to 6.6 per cent of GSP.

What Labor  really abhors is dishonest debt. The Napthine  government would have people believe that it sees  public debt as a cardinal sin. Yet through creative accounting and bookkeeping  tricks, it has been  steadily ramping up  our  state debt. Chapter 5 of  the  report,  starting  at page 87 and entitled ‘Borrowings, debt  and   liabilities’,  contains  some   alarming  observations  about   this government’s approach to managing financial liabilities. For example, at page 88 the committee decries the lack of transparency shown by  this government, saying it:

  … does  not present any  interim net  debt targets  which could  be used  to  assess the extent to which the current plans align with the … target.

True  to form, the  government rejected the recommendation  of the committee. At page 94 the report highlights  the  fact  that  the  government has been forcing public  non-financial  corporations (PNFC)  to borrow  money  through burdensome dividend policies. It states:

  PNFC sector borrowings  and net debt are expected to increase over the forward  estimates period —

           and —

  The committee notes that the  government has committed to  increasing its role  as ‘an active shareholder of public commercial entities’ …

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The PAEC report was released in October this year, and this was not the first or the last  time the  government has  been warned  about the  risks it is running. Shuffling money around the state of Victoria through its books in an attempt  to conceal massive  increases  in government debt  is having a  seriously  damaging effect on our financial position.

Most recently the Auditor-General highlighted  the fact that in order to pay the $1.2 billion in dividends that the state demanded from PNFCs it was being forced to borrow money. This  government’s addiction to gouging public corporations for dividends, shifting the financial pressure to bodies like water corporations and WorkCover that should use that money for  the  public  good, is extraordinary to behold. The  coalition has increased dividends  from public corporations  by 300 per cent. In the 2012-13 period — —

  Ms Asher — On a point of order, Acting Speaker.

I am happy to  stop  the clock at the Chair’s discretion. Whilst  I  am loath to interrupt a 5-minute presentation, and   I  am  well  aware  that the member for Tarneit indicated  a parliamentary report at the beginning of  his contribution, he  is  now  straying  further  than that parliamentary report and giving a  set speech. I ask you to call him back to order.

Mr Pallas —  On the point of  order,  Acting Speaker, if the  member had been listening,  I  was  referring  to chapter 5, starting at page  87,  which  deals specifically with the net debt  targets,  together  with use of dividends by the government.  I am talking directly to the issue  of  dividends.  Short  of  just quoting the reports, I cannot see how  I  can do any more to extrapolate on  the comments in the report.

Mr Pallas  — Thank  you, Acting Speaker. What we have seen, as the  committee has indicated,  is increasing concern relating  to the increase  in  state debt. That $1.2 billion  goes straight into propping up the coalition’s surplus, which at $316 million is  wafer  thin  by comparison with the consistent and long-term surpluses  of the previous  government. There is  foolish  pride associated with this government’s  efforts to extol its surpluses when the average operating net result between 2000  and  2010 shows  that  the previous government  provided  a surplus of $1 billion per annum.

The only  time a  Labor  surplus  was  anywhere  near  as  low  as  the  current government’s was at the height  of the global financial crisis in 2008-09. There is something extraordinarily crass about the government talking  up its economic rationalism as if it is in some way due credit for this.

I  hope the  government  heeds the recommendations  of  the Public Accounts  and Estimates  Committee,  the  Auditor-General,  the public  finance  experts,  the business community and countless  others about the way  it has been  mismanaging debt.  This government  should not  be in  the  business  of  taking a  bow when economic  growth  is  growing  at  a full percentage point less than the  decade average, when there are 40 000  more  unemployed  Victorians  than  when it took office and when it has managed to triple state debt.